Liberty University ECON 213 quiz 9 complete solutions correct answers A+ work

Liberty University ECON 213 quiz 9 complete solutions correct answers A+ work

More than 7 different versions

Question 1

When marginal revenue equals marginal cost:

Question 2

Dave’s Batting Cages is located in Boston, Massachusetts. During the first year of operation, Dave’s Batting Cages incurred many costs. In that year, Dave spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Dave took out a loan to open his business, in which he would have earned $1,500, and his previous job, which he could get back at any time, paid him $50,000. If Dave’s Batting Cages received $80,000 in revenues, what were the economics profits?

Question 3

An example of an implicit cost is:

Question 4

Total revenue minus total cost equals:

Question 5

If the shortrun market supply curve and the demand curve intersect above the longrun market supply curve, firms will experience _________ economic profits, meaning the price is _________ the minimum point on the average total cost curve.

Question 6

If the shortrun supply curve and the demand curve intersect below the longrun supply curve, firms will experience _________ economic profits, meaning the price is _________ the minimum point on the average total cost curve.

Question 7

In the short run, a competitive firm may choose to operate at a loss:

Question 8

Which of the following lists the three main characteristics of a competitive market?

Question 9

If firms in a competitive market are making zero economic profits, the longrun market supply curve:

Question 10

The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the questions that follow.

Assuming that all firms have the same cost structure, the price is:

Question 11

According to the accompanying figure, the longrun market supply curve would be a horizontal line:

Question 12

Kimberly owns a cupcake shop in Newport Beach, California. The market for cupcakes is very competitive. At Kimberly’s current production level, her marginal cost is $25 and her marginal revenue is $29. To maximize profits, Kimberly should:

Question 13

According to the accompanying figure, if the price is $5, the firm is making

Question 14

Refer to the accompanying graph to answer the questions that follow.

If the firm is maximizing profits, total cost is represented by the area:

Question 15

An example of an explicit cost is:

Question 16

Refer to the accompanying figure. A firm would shut down in the short run if the price is:

Question 17

The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the questions that follow.

Profits are maximized when producing:

Question 18

When talking about economic profits in a perfectly competitive market, the difference between the long run and the short run is that, in the short run, firms:

Question 19

A farmer’s market is close to being a perfectly competitive market. Which characteristic of a perfectly competitive market do most farmer’s markets violate?

Question 20

If Nicole’s KnickKnacks is a perfectly competitive firm and is making zero economic profits:

Question 1 In its simplest form, the long­run market supply curve is a(n):

Question 2 Refer to the accompanying figure. Point _________ corresponds to the profit­maximizing quantity that a competitive firm would produce.

Question 3 Refer to the accompanying table. A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is:

Question 4 If Nicole’s Knick­Knacks is a perfectly competitive firm and is making zero economic profits:

Question 5 Jim and Lisa own a dog­grooming business in Champlain, New York, called JL Groomers. There are many buyers and many sellers in the dog­grooming service market. JL Groomers experiences normal cost curves, with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22. JL Groomers will always shut down if the market price is:

Question 6 Competitive markets exist when:

Question 7 Refer to the accompanying graph to answer the questions that follow. If the firm is maximizing profits, profit is represented by the area:

Question 8 The market for hot dogs on the streets of New York City can be considered close to a perfectly competitive market. Because there are so many individuals buying and selling hot dogs:

Question 9 If the market price is $15 and marginal cost is represented by the equation 2 Q , where Q is in thousands of units, what is the profit­maximizing quantity?

Question 10 When firms exit a market, the _________, causing individual firms’ profits to _________.

Question 11 Which characteristic of competitive markets is mainly responsible for ensuring that prices will be kept low?

Question 12 If firms in a competitive market are incurring economic losses, the long­run market supply curve:

Question 13 Charlie’s Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Charlie’s Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs. Holding all else constant, the price in this market will:

Question 14 An example of an explicit cost is:

Question 15 In a competitive market, if one firm raises its price relative to the other firms in the market, consumers are willing to go to another firm because:

Question 16 Refer to the accompanying graph to answer the questions that follow. If this firm is maximizing profits, total revenue is represented by the area:

Question 17 At current production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. The firm should:

Question 18 Which of the following conditions will result in the firm making an economic profit?

Question 19 If firms in a competitive market are making zero economic profits, the long­run market supply curve:

Question 20 Signals:

Which of the following lists the three main characteristics of a competitive market

Competitive markets exist when

One difference between implicit costs and explicit costs is that

In the long run, if a firm is making a loss, it will

If Firm A is making zero economic profits

A firm’s short-run supply curve is equal to the firm’s

When firms enter a market, the _________, causing individual firms’ profits to _________.

All firms, no matter what type of firm structure they are producing in, make their production decisions based on the point where their

Charlie’s Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Charlie’s Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs. Charlie’s Churros’ accounting profits are

An example of an implicit cost is

If a competitive firm can make enough revenue to cover its variable costs, the firm will

A firm characterized as a price-taker

When firms exit a market, the _________, causing individual firms’ profits to _________.

A firm’s willingness to supply its product in the long run is represented on a graph by the

Refer to the accompanying table. A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is

Refer to the accompanying set of graphs to answer the questions that follow. Which graph would result in firms entering a perfectly competitive market in the long run

If the market price is $15 and marginal cost is represented by the equation 2  Q , where Q is in thousands of units, what is the profit-maximizing quantity

The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the questions that follow. When profits are maximized, profits are equal to

A good economist will ignore _________ and focus on _________ when it comes to making the right decisions

According to the accompanying figure, the longrun market supply curve would be a horizontal line

Question 1 In the long run, if a firm is making a loss, it will:

Question 2 Refer to the accompanying figure. This firm’s short­run supply curve is represented by the:

Question 3 In competitive markets:

Question 4 Jim and Lisa own a dog­grooming business in Champlain, New York, called JL Groomers. There are many buyers and many sellers in the dog­grooming service market. JL Groomers experiences normal cost curves, with the marginal cost (MC) curve crossing average variable cost (AVC) at $14 and average total cost (ATC) at $22. JL Groomers will always shut down if the market price is:

Question 5 Dave’s Batting Cages is located in Boston, Massachusetts. During the first year of operation, Dave’s Batting Cages incurred many costs. In that year, Dave spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Dave took out a loan to open his business, in which he would have earned $1,500, and his previous job, which he could get back at any time, paid him $50,000. Dave’s Batting Cages incurred _________ in explicit costs.

Question 6 Refer to the accompanying figure to answer the questions that follow. If the price is $3, the firm is making:

Question 7 A firm’s willingness to supply its product in the long run is represented on a graph by the:

Question 8 The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the questions that follow. Profits are maximized when producing:

Question 9 Firms will be indifferent about shutting down or producing if the price they charge is:

Question 10 The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the questions that follow. When profits are maximized, profits are equal to:

Question 11 If firms in a competitive market are making positive economic profits, you would expect firms to:

Question 12 A firm will shut down in the long­run if the:

Question 13 Which of the following lists the three main characteristics of a competitive market?

Question 14 Refer to the accompanying figure. A firm would be suffering a loss but still be producing if the price is:

Question 15 Charlie’s Churros is a perfectly competitive firm that sells desserts in Houston, Texas. Charlie’s Churros currently is taking in $40,000 in revenues, and has $15,000 in explicit costs and $25,000 in implicit costs. Charlie’s Churros’ accounting profits are:

Question 16 Tom’s Campgrounds is a firm conducting business in a competitive market. Tom realizes he is making a loss and is trying to decide whether to shut down or stay open. He should stay open:

Question 17 If Dirk’s Doughnuts is a perfectly competitive firm and is currently incurring economic losses of $500:

Question 18 One reason why the long­run supply curve may slope upward in a competitive market is that:

Question 19 If Nicole’s Knick­Knacks is a perfectly competitive firm and is making zero economic profits:

Question 20 Refer to the accompanying set of graphs to answer the questions that follow. Which graph would result in firms exiting a perfectly competitive market in the long run?

Question 1 In a competitive market, if one firm raises its price relative to the other firms in the market, consumers are willing to go to another firm because:

Question 2 Refer to the accompanying table. A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is:

Question 3 Refer to the accompanying figure. Point _________ corresponds to the profit­maximizing quantity that a competitive firm would produce.

Question 4 Refer to the accompanying figure. A firm would be suffering a loss but still be producing if the price is:

Question 5 Refer to the accompanying table. A firm participating in a competitive market with these costs would be making a profit if the price is:

Question 6 The city of Tustin, California, has spent $10 million on a project to build a new community college. It will cost the city $40 million to finish the project. When making the decision to continue the project, the city’s chief economist tells the city council to ignore the $10 million because:

Question 7 A firm’s willingness to supply its product in the short run is represented on a graph by the:

Question 8 A firm’s short­run supply curve is equal to the firm’s:

Question 9 Refer to the accompanying figure to answer the questions that follow. If the price is $3, the firm is making:

Question 10 When talking about economic profits in a perfectly competitive market, the difference between the long run and the short run is that, in the short run, firms:

Question 11 Dave’s Batting Cages is located in Boston, Massachusetts. During the first year of operation, Dave’s Batting Cages incurred many costs. In that year, Dave spent $5,000 on labor, $2,000 on maintenance, and $1,000 on electricity. Dave took out a loan to open his business, in which he would have earned $1,500, and his previous job, which he could get back at any time, paid him $50,000. Dave’s Batting Cages incurred _________ in explicit costs.

Question 12 Refer to the accompanying figure. A firm would be making positive profits if the price is:

Question 13 All firms, no matter what type of firm structure they are producing in, make their production decisions based on the point where their:

Question 14 A firm characterized as a price­taker:

Question 15 A good economist will ignore _________ and focus on _________ when it comes to making the right decisions.

Question 16 The accompanying table represents the quantity produced, the total revenue, and the total cost of a firm operating in a perfectly competitive market. Refer to this table to answer the questions that follow. Profits are maximized when producing:

Question 17 Because of market forces, firms have _________ when competition is widespread.

Question 18 A farmer’s market is close to being a perfectly competitive market. Which characteristic of a perfectly competitive market do most farmer’s markets violate?

Question 19 The University of California at Irvine (UCI) allows student organizations and private firms to sell items on campus to raise funds for various activities. Many of the organizations sell boba, a Taiwanese tea drink, because boba is popular with students. The market for boba on the UCI campus is very competitive. If legislation is passed to restrict the entry of private firms into the boba market at the UCI campus, the

Question 20 According to the accompanying figure, the longrun market supply curve would be a horizontal line:

____       1.    A firm’s accounting profit is always greater than its economic profit because:

a.

economic profit considers implicit costs, which accounting profit does not.

b.

accounting profit considers explicit costs, which economic profit does not.

c.

economic profit is always zero, no matter what kind of firm it is.

d.

accounting profit considers implicit costs, which economic profit does not.

e.

accounting profit is always positive, no matter what kind of firm it is.

____       2.    Lauren is the owner of a bakery. Last year, her total revenue was $145,000, her rent was $12,000, her labor costs were $65,000, and her overhead expenses were $15,000. From this information, we know that her accounting profit was:

a.

$145,000.

b.

$53,000.

c.

$65,000.

d.

$15,000.

e.

$27,000.

____       3.    Madison owns a boxing gym. She recently expanded the size of her gym by adding another boxing ring and moving into a larger building so that she can serve more clients. How would Madison know if she is experiencing economies of scale from increasing the size of her boxing gym?

a.

Her average cost per client increases.

b.

Her total cost increases.

c.

Her average cost per client remains the same.

d.

Her average cost per client decreases.

e.

Her total cost remains unchanged.

____       4.    Which is the best example of economies of scale?

a.

the local power company

b.

the pizza business

c.

the restaurant industry

d.

a parking garage

e.

a small family farm

____       5.    Darrell owns a furniture store. If he decided to expand the size of his store in order to sell more furniture, how would he know if he is experiencing diseconomies of scale?

a.

His total cost of selling furniture decreases.

b.

His average cost of selling furniture increases.

c.

His total cost of selling furniture remains unchanged.

d.

His average cost of selling furniture remains unchanged.

e.

His average cost of selling furniture decreases.

____       6.    A firm characterized as a price-taker:

a.

has control over the price it pays, or receives, in the market.

b.

sets the price for the market.

c.

has no control over the price it pays, or receives, in the market.

d.

is not a characteristic of a perfectly competitive market.

e.

takes the price that is determined from the lowest price consumers are willing to pay for an item.

____       7.    In competitive markets:

a.

firms set the prices for their products with little concern for the consumer.

b.

firms control the prices they charge.

c.

market forces are much stronger than individual firms are.

d.

individual firms are much stronger than the market forces are.

e.

market forces set the quantity in the market but not the prices.

____       8.    In competitive markets:

a.

firms set the prices for their products with little concern for the consumer.

b.

firms are considered to be price makers.

c.

firms are at the mercy of market forces.

d.

the individual firms are much stronger than the market forces are.

e.

the market forces set the quantity in the market but not the prices.

____       9.    Which characteristic of competitive markets is mainly responsible for ensuring that prices will be kept low?

a.

many buyers

b.

many sellers

c.

similar goods

d.

easy entry into and exit from the market

e.

differentiated goods

____     10.    Which characteristic of competitive markets is mainly responsible for firms making zero economic profits in the long run?

a.

many buyers

b.

many sellers

c.

similar goods

d.

differentiated goods

e.

easy entry into and exit from the market

____     11.    If Firm A is making zero economic profits,

a.

Firm A is also making negative accounting profits.

b.

Firm A is breaking even when opportunity cost is taken into consideration.

c.

other firms want to enter the market.

d.

Firm A wants to leave the market.

e.

Firm A wants to shut down in the short run.

____     12.    One difference between implicit costs and explicit costs is that:

a.

implicit costs are included in accounting profits, whereas explicit costs are not.

b.

implicit costs are included in economic profits, whereas explicit costs are not.

c.

explicit costs are included in accounting profits, whereas implicit costs are not.

d.

explicit costs are included in economic profits, whereas implicit costs are not.

e.

explicit costs involve opportunity costs, whereas implicit costs involve a monetary transaction.

____     13.    A monopoly:

a.

always makes a profit.

b.

can force consumers to purchase what it is selling.

c.

is characterized by a single seller who produces a well-defined product for which there are no good substitutes.

d.

always has naturally created barriers.

e.

always has government-created barriers.

____     14.    Monopolists:

a.

enjoy market power for their specific product.

b.

have no market power for their specific product.

c.

will never experience a loss.

d.

always experience economies of scale.

e.

exist in all markets.

____     15.    Barriers to entry:

a.

measure the ability of firms to set the price for a good.

b.

do not exist for monopolies.

c.

always lead to profits.

d.

restrict the entry of new firms into the market.

e.

exist for perfectly competitive firms.

____     16.    Monopolies result in a(n) __________ level of output and provide __________ choice to consumers.

a.

inefficient; less

b.

inefficient; more

c.

efficient; less

d.

efficient; more

e.

high; more

____     17.    Beer prices at major league baseball stadiums are usually much higher than prices at a bar or restaurant. This is mainly because:

a.

it costs the owners of the baseball teams more money to buy the beer from distributors.

b.

demand is much higher at a baseball game than at a bar.

c.

baseball team owners have market power and can charge a higher price when they are the only sellers of the beer.

d.

the government forces the owner of baseball teams to charge a high price.

e.

the owners’ baseball teams are not profit-maximizing.

____     18.    Reducing trade barriers creates _________ competition, _________ the influence of monopoly, and _________ the efficient use of resources.

a.

less; reduces; promotes

b.

more; reduces; promotes

c.

less; increases; promotes

d.

more; reduces; hinders

e.

more; increases; hinders

____     19.    Price discrimination exists when a firm sells __________ goods at more than one price to __________ groups of customers.

a.

different; similar

b.

existing; distinct

c.

discounted; large

d.

identical; different

e.

limited; restricted

____     20.    Price discrimination exists when a firm is able to sell the same good at more than one price to different groups of:

a.

producers.

b.

firms.

c.

consumers.

d.

promoters.

e.

commodities.

____     21.    A firm can be identified as practicing price discrimination when:

a.

consumers engage in comparison shopping to find the lowest advertised price.

b.

firms behave as price-takers, whereas consumers react with price-making behavior.

c.

buyers in a perfectly competitive market are able to influence the prices that firms set.

d.

producers pass on differences in costs to those price-conscious consumers willing to buy in bulk.

e.

producers set different prices for distinct groups of consumers, despite selling identical products to each group.

____     22.    Despite the gain from higher profits, firms are not always able to price-discriminate because:

a.

they are unable to partition their customers into distinct groups.

b.

it is always illegal to price-discriminate in the United States.

c.

they already hold a large degree of market power.

d.

they already provide their goods at the lowest possible prices.

e.

they can easily determine each customer’s reservation price.

____     23.    Price discrimination can help improve efficiency in the market because goods are sold to more people, thus increasing profits. If all consumers have similar tastes, will a firm be able to price-discriminate?

a.

Yes, because the market is homogeneous

b.

Yes, as long as reselling is prohibited in the market

c.

No, because the firm will not be able to distinguish among groups of consumers

d.

No, because the similarities among consumers will lead to collusion among buyers

e.

Yes, because there will be a monopoly in the market (because all consumers want to purchase the same goods and services)

____     24.    An example of price discrimination is when:

a.

movie theaters do not allow children into R-rated movies without a parent or guardian.

b.

you can purchase a new PC for half the price of a new Mac, even though they are both computers.

c.

Procter & Gamble charges $9 for a bottle of Tide laundry detergent, while the store brand costs the consumer significantly less, despite being somewhat similar products.

d.

out-of-state students pay more for the same education as in-state students.

e.

a single box of Froot Loops costs $3.50, but when purchased in a case of six, it costs only $3.00 per box.

____     25.    Monopolistic competition means:

a.

firms are in a monopoly but they compete.

b.

firms are in perfect competition but they collude similar to monopolies.

c.

firms differentiate their output, which makes them price-makers, but barriers to entry are low or non-existent.

d.

oligopoly firms collude until they become monopolies.

e.

firms have downward-sloping demand.

____     26.    If we are to discuss why the term “monopolistic competition” is used, the best description would be that the industry is “monopolistic” because it:

a.

has high barriers to entry but is “competitive” because it has many firms.

b.

has low barriers to entry but is “competitive” because it has few firms.

c.

has product differentiation but is “competitive” because it has many firms.

d.

has a monopoly but is “competitive” because there are low barriers to entry, meaning it has potential rivals.

e.

holds patents but is “competitive” because other firms might invent similar patentable products.

____     27.    One critical characteristic of monopolistic competition is:

a.

one firm dominates the industry.

b.

a few firms collude with each other by agreeing on price.

c.

a few firms compete without agreeing on price.

d.

there are many small firms in the industry.

e.

there is one large firm in the industry but it has no control over the price.

____     28.    A monopolistically competitive market is characterized by:

a.

many small sellers selling a differentiated product.

b.

a single seller of a unique product that has few or no substitutes.

c.

very high barriers to entry.

d.

many small sellers selling an identical product.

e.

a few firms producing either differentiated or identical products.

____     29.    Like a pure monopoly, an oligopoly is characterized by:

a.

free entry and exit in the long run.

b.

free entry and exit in the short run.

c.

significant barriers to entry.

d.

all firms in the market producing the socially efficient level of output in the long run.

e.

a single firm selling a product with no close substitutes.

____     30.    A monopolistically competitive market consists of many sellers, an oligopoly consists of __________ seller(s), and a monopoly consists of __________ seller(s).

a.

one; one

b.

one; two

c.

a few; many

d.

a few; one

e.

many; one

Which of the following conditions will result in the firm making zero economic profits

A good economist will ignore _________ and focus on _________ when it comes to making the right decisions

The presence of many buyers and sellers is an important characteristic of competitive markets because it allows

At current production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. The firm should

Marginal revenue is the change in total

Firms will break even if the price they charge is

Firms will always make a positive economic profit if the price they charge is

If firms in a competitive market are incurring economic losses, you would expect firms to

The marginal cost curve is the short-run supply curve

Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market

Firms in a monopolistically competitive industry produce

A monopoly

One critical characteristic of monopolistic competition is

Monopolistically competitive firms that are earning zero economic profit would most likely

We can represent the entry of new firms into a monopolistically competitive market by shifting the existing firms

The accompanying table shows two firms in a single- stage duopoly game. Each firm makes its decision without knowledge of the other firm’s decision. The payoffs for each firm represent economic profits, and each firm strictly prefers more economic profit than less. Assume firms are not able to collude. The Nash equilibrium total quantity of potatoes on the market is

Which of the following industry structures is best associated with low barriers to entry

A price-maker

Sunk costs

If firms in a competitive market are making positive economic profits, you would expect firms to

The presence of many buyers and sellers is an important characteristic of competitive markets because it allows

Firms will always make a positive economic profit if the price they charge is

A firm’s short-run supply curve is equal to the firm’s

If firms in a competitive market are incurring economic losses, you would expect firms to

Which characteristic of competitive markets is mainly responsible for firms making zero economic profits in the long run

When marginal revenue equals marginal cost

Firms in every market structure

If monopolistically competitive firms are making positive economic profits, then new firms would

Ash is the preferred wood to be used in the production of baseball bats. If a company were to buy the rights to harvesting the ash trees out of all the forests in North America, which of the following barriers of entry has this company created

If barriers to entry are high and products are somewhat differentiated

If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should

If a monopolist is producing a quantity where marginal revenue is equal to $16 and the marginal cost is equal to $17, the monopolist should

Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market

Monopolistic competition

Which of the following is the best description of monopolistic competition

If we are to discuss why the term “monopolistic competition” is used, the best description would be that the industry is “monopolistic” because it

Question 1

The University of California at Irvine (UCI) allows student organizations and private firms to sell items on campus to raise funds for various activities. Many of the organizations sell boba, a Taiwanese tea drink, because boba is popular with students. The market for boba on the UCI campus is very competitive. If legislation is passed to restrict the entry of private firms into the boba market at the UCI campus, the

Select one:

a. market would become more competitive.

b. demand for boba would fall.

c. supply for boba would increase.

d. demand for boba would increase.

e. market would become less competitive.

Question 2

Refer to the accompanying graph to answer the questions that follow.

If this firm is maximizing profits, total revenue is represented by the area:

Select one:

a. B x C

b. A x B

c. (A+B) x C

d. A x C

e. B x C

Question 3

All firms, no matter what type of firm structure they are producing in, make their production decisions based on the point where their:

Select one:

a. marginal revenue equals price.

b. average total cost is minimized.

c. marginal revenue equals marginal costs.

d. total revenue equals total cost.

e. profits are equal to zero.

Question 4

Firms will always make a positive economic profit if the price they charge is:

Select one:

a. less than their minimum average total cost (ATC).

b. less than their minimum average variable cost (AVC).

c. greater than their minimum average total cost (ATC).

d. greater than their minimum average variable cost (AVC).

e. equal to their minimum average total cost (ATC).

Question 5

Chuck Diesel Burger is a food truck in Houston, Texas. Imagine that Chuck Diesel Burger’s minimum average total cost (ATC) is $3.75 and that its minimum average variable cost (AVC) is $2.50. Assume there are no barriers to entry into or exit from the food-truck market. Chuck Diesel Burger will break even if the price is equal to:

Select one:

a. $4.00.

b. $2.00.

c. $3.00.

d. $3.75.

e. $2.50.

Question 6

Refer to the accompanying figure. If the price is $8, the firm is making:

Select one:

a. a loss and more firms will enter the market.

b. a loss and will exit the market.

c. zero profit and the market is at long-run equilibrium.

d. a profit and will exit the market.

e. a profit and more firms will enter the market in the long run.

Question 7

Refer to the accompanying figure. A firm would be making positive profits if the price is:

Select one:

a. below $5 but above $4.

b. below $4.

c. anywhere below $5.

d. above $5.

e. anywhere above $4.

Question 8

In the short run, a competitive firm may choose to operate at a loss:

Select one:

a. only if those losses are accounting losses.

b. only if those losses are economic losses.

c. to ensure that other firms make a loss as well.

d. to gain market power in the future.

e. to recover a portion of its fixed costs.

Question 9

Refer to the accompanying table. A firm participating in a competitive market with these costs would break even if the price is:

Select one:

a. $4.

b. $6.

c. $2.

d. $8.

e. yes

Question 10

Refer to the accompanying figure. A firm would shut down in the short run if the price is:

Select one:

a. anywhere above $4.

b. anywhere below $5.

c. below $4.

d. below $5 but above $4.

e. above $5.

Question 11

A firm’s short-run supply curve is equal to the firm’s:

Select one:

a. demand curve.

b. marginal cost curve above minimum average variable cost (AVC).

c. marginal cost curve below minimum average variable cost (AVC).

d. marginal revenue curve.

e. marginal cost curve above minimum average total cost (ATC).

Question 12

It’s easy to determine if a firm is making long-run production decisions by looking at its cost structure because, in the long run, a firm does not have any:

Select one:

a. fixed costs.

b. sunk costs.

c. marginal costs.

d. opportunity costs.

e. variable costs.

Question 13

Refer to the accompanying figure. A firm would produce in the long-run only if the market price is:

Select one:

a. above $15.

b. between $8 and $15.

c. above $20.

d. above $8.

e. between $15 and $20.

Question 14

Costs that have been incurred as a result of past decisions are known as:

Select one:

a. opportunity costs.

b. marginal costs.

c. sunk costs.

d. fixed costs.

e. variable costs.

Question 15

If the short-run supply curve and the demand curve intersect below the long-run supply curve, firms will experience _________ economic profits, meaning the price is _________ the minimum point on the average total cost curve.

Select one:

a. zero; above

b. negative; above

c. negative; below

d. positive; above

e. positive; below

Question 16

One difference between implicit costs and explicit costs is that:

Select one:

a. explicit costs are included in accounting profits, whereas implicit costs are not.

b. explicit costs are included in economic profits, whereas implicit costs are not.

c. implicit costs are included in accounting profits, whereas explicit costs are not.

d. implicit costs are included in economic profits, whereas explicit costs are not.

e. explicit costs are included in economic profits, whereas implicit costs are not.

Question 17

You can tell a firm is operating in a market that is in long-run competitive equilibrium if:

Select one:

a. economic profits are positive.

b. economic profits are negative.

c. economic profits are zero.

d. accounting profits are negative.

e. accounting profits are zero.

Question 18

If Nicole’s Knick-Knacks is a perfectly competitive firm and is making zero economic profits:

Select one:

a. the market supply curve will shift to the right.

b. firms will exit the mar